The Decline of Academic Research and the Rise of Startups

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By

Charles Beyrouthy

on

April 22, 2016

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I’ll start off with this. I am not in academia and do not have a PhD. I am an engineer and scientist who turned into an entrepreneur with a background in academic and industry research. My job is to work with organizations in research. I started a company to build a product that will change the way science is done and turn a profit. I started it with my co-founder because I cared about science and wanted to see organizations succeed among the myriad of operational issues they encounter in their labs on a daily basis. I find it exciting to see products that change the lives of people and how they work, in whatever industry they are in, which is why I have find companies so fascinating. But are all organizations in science and research approaching innovation the same way? To that effect, I would like to have a frank conversation on the following topic; are academics producing the kind of results that are producing products that government, industry and the general population demand for the betterment of everyday life?

The Answer; Well it depends. For the majority of scientific research, the National Science Foundation and the National Institute of Health are the largest entities funding academic research in the United States. They have funded everything from the Human Genome Project to the world's first supercomputer. However, in an economy that is desperate for innovation and job creation, the intense directive to these organizations has been to fund organizations that have the potential to produce these results. This falls in direct conflict with the academic status quo.

In academia, the majority of research is done by professors, graduate students and post-doctoral associates with minor contributions from undergraduates and the majority of research in academia can be considered theoretical research at best. In other-words, this is research that may be interesting but does not actually produce a tangible product. Don’t get me wrong, some of this stuff is really exciting. But this is not what science in America needs right now. It’s not something industry is going subsidize and more importantly, the government does not want to either. In America, we need jobs. We need success stories. We need real, tangible innovation. For this, it’s time to look at the statistics. (See here)

So let’s talk about life sciences. In the life sciences, the NIH is the most prevalent funding organization. In academia, a large majority of funding comes from this organization. In 2015, their estimated budget is just above $30 Billion USD. (See here) In 2004, this budget was closer to $40 Billion USD implying a reduction in appropriations at a rate of $1 Billion USD per year. This is not to mention that while a budget may increase a maximum of 0.7% per year, the cost of doing business (or in this case the cost of doing research) is rising at a rate of 2.9% a year. This has created a stir and as a result, organizations in the sciences have been trying to cut their losses. The biggest losers (you guessed it) are academic institutions. A perfect example is the University of Virginia, where their grant awards have dropped from $252 Million USD to $187 Million USD. And federal and state governments don’t look like they are going to change direction on these policies. In short, universities across America are having conversations with their professors on ideas on how to go forward…and it’s becoming difficult.

In this environment, if academia is suffering, who is doing well? One Word: Start-ups. The government has been showing an enormous favoritism to start-ups because of their job creation record. They have been working on projects such as scaling solar power and electric cars. They have been investing in cyber security and strategic defense. In Massachusetts, a cradle of life science, start-ups have been funded by millions of dollars of funding for research and product development in cutting edge drug and medical device research that out paces the best academic research institutions. In addition, they are some of the States’ largest job creators, attracting the best talent from all over the world and making Boston and Cambridge some of the most innovative cities in America. This is not to mention that private companies and investors have been investing profusely into these new companies with the expectation of high returns. The best part; they are just as trained and as capable as their academic counterparts. In an economy where the majority of manufacturing is now being done abroad, start-ups have been driving the resurgence of innovation in America. And this scares academics to no end.

Academics and Industry have a complicated relationship. Industry values the academic world for its achievements and technological know-how which has prompted many successful partnerships. However, industry has been looking for financial returns more than ever. This is why there has been a reduction of partnerships over the past 5 years. Academics (to be honest), have a real reservation of working with industry experts. Within university walls, academics are able to maintain their independence and to some extent, set their own expectations and their own time table. As long as you have tenure and funding, you really have nothing to worry about. When adding a fiduciary responsibility to the mix where they become responsible to a corporation for their results, many academics have expressed the sentiment of enslavement or as one professor put it at a recent university meeting I attended, “we are afraid of being gagged.” I have two words for people who think this way; Wake up. If academics take money of any kind, they should be held accountable. They, like research scientists at private companies, should be responsible for the results they bring.

In short, from a capital standpoint, I believe that academia is no longer fundable (and I don’t think I am the only one). I’m sure this is a controversial comment. Ask a financial capital expert and the academic stock is considered a “long term, high risk” at best (and they are not alone with that opinion). I’m sure this is a controversial comment as well. And yes, there are exceptions. However,the past trends do not lie. Waste and lack of results at these organizations is nothing new and there are multiple papers published on this topic. (See here). This is unacceptable in an industry setting. In that regard (in all honesty), the bailing out of General Motors was a better investment. It saved millions of jobs and tax payers got their money back, something that the majority of academic projects cannot promise. I think it’s time to save tax payer dollars and invest in start-ups and companies who are developing the jobs and the applied technologies of the future. And if academia wants to be a part of this phenomenon (which I think is in the next 10 years is going to prove inevitable), I think academic labs should partner with them. As a matter of fact, I think it should be mandated. And to that effect, university labs will be able to indulge in this emerging market and create a strategy of success for the future.

For example, ask MIT and Stanford. They are doing it already…and they are not worried about federal or state government funds. They are investing into the future by leading from behind and creating a formula to rapidly take technology from their labs and bring it to industry. They are working with start-ups and their founders and succeeding on a tremendous scale. Conclusion: Universities need reform to stem the decline and academics need to put pride aside, build products of the future and learn to work more closely with their industrial counterparts, lest the concept of a research university ceases to exist in all but a few, innovative places.